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Shopping Season 2007: Reports of the American consumer’s death may be a tad premature

Posted November 24, 2007

“Despite a record-low dollar, foreign producers are still grudgingly cannibalizing their margins on exports to keep their US market share intact and products competitive.” — J. Christoph Amberger

by J. Christoph Amberger, TFN

Baltimore — (TFN): You’ve heard them whine for weeks: This Christmas season is gonna be baaad. Baaaad. The American consumer feels the “credit crunch”. No longer can tap into his home equity for fast and easy cash. The sky is falling. Malls and stores on Black Friday would be empty as middle class America was considering giving scrubbed raw potatos as Christmas gifts to the kids this year, instead of motor scooters.

Today’s hometown paper unexpectedly provided a dose of reality: “Shoppers go for broke: Financial worries aside, bargain hunters stormed local stores at the start of the holiday shopping season”.

Of course, there will be little to no difference this season over last year’s spending spree. Americans stopped using home equity for spending when refinancing became uneconomic two years ago. If they’re smart, they could be filling for reassessment of their property taxes right now, lowering their annual pound of flesh to the community based on lower home prices. And despite a record-low dollar, foreign producers are still grudgingly cannibalizing their margins on exports to keep their US market share intact and products competitive.

Plus, household income is at record levels… employment stable… and taxes low.

That all is likely to change next year. But for this Holiday Season, I predict it will once again pay off ignoring the analysts and newsletter editors — and be bullish on US consumer spending for the rest of the year.

***Don’t forget to watch this weekend’s Smart Trading Action Alert: Smart Trading Action Alert: Given the beating some blue chips have taken in recent weeks, select small-cap stocks now provide opportunities for safe profits. Ian Cooper explains.

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Posted by J. Christoph Amberger · Filed Under US Stocks and Markets 

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